Hospital Financial Challenges Persist through 2022

November 03, 2022

The latest Kaufman Hall snapshot highlights hospitals’ financial strain, with operating margins remaining in the red for the ninth consecutive month during September.

Hospitals faced a persistent mix of challenges, with higher patient acuity, workforce shortages, and declining revenue contributing to one of the “worst financial years,” the health care analyst noted.

“Heading into the final quarter of the year, hospitals and physician practices have had little reprieve during a very difficult 2022 from a financial perspective,” said Erik Swanson, a senior vice president of Data and Analytics with Kaufman Hall.  

Here's what you need to know:

• Margins:  Year-to-date, hospital operating margin is -0.1 percent. This is the ninth straight month with negative actual operating margins.
• Revenues, operating time:  Revenues declined across key areas. Operating room minutes decreased 5 percent from the previous month. Total discharges declined 3 percent from August. Adjusted patient days and emergency department visits both declined 3 percent from August.
• Expenses:  During September, total hospital expenses dropped slightly (1%) from August, but are up 3 percent from September 2021 and 8 percent year-to-date.
• Inflationary pressure:  Hospitals are facing the same inflationary pressures that are raising costs across sectors. The Consumer Price Index (CPI) rose 0.4 percent during September. Consumer prices were up 8.2 percent from a year ago.
• Quotable:  “Hospitals and physician practices could climb back into the black by the end of the year, but it is looking less and less likely as months of negative margins continue to pile up,” Swanson said.

HAP continues to advocate for resources to ensure hospitals remain anchors within their communities. Throughout the commonwealth, hospitals play a vital role in their communities, generating a $168 billion economic impact in Pennsylvania.

The National Hospital Flash Report, as well as an accompanying Physician Flash Report, is available to review online.